CTA
December 27, 2024
National Injunction
Corporate Transparency Act
There has been another development in the litigation challenging the constitutionality of the Corporate Transparency Act (CTA). Late last night the U.S. Court of Appeals for the Fifth Circuit vacated the December 23 order that stayed the nationwide injunction that enjoined enforcement of the CTA.
This means that enforcement of the CTA is again enjoined, and reporting companies are not required to report beneficial ownership information absent a further order from the court. We expect the injunction to remain in place at least until the Fifth Circuit hears oral arguments on March 25, 2025, because the court’s order states that it took this action “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”
If you have not filed beneficial ownership reports, you can wait to do so. If you have complex or substantial reporting obligations, you should be ready to file beneficial ownership reports should the injunction be lifted. The Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the agency responsible for enforcing the CTA, has not yet provided guidance regarding the pause in compliance with the reporting requirements, however, based on guidance from earlier this week we expect FinCEN to at least provide a limited extension of the reporting deadlines should the injunction be lifted.
We are continuing to closely monitor developments in this case and other pending cases challenging the CTA and will provide updates regarding any changes in the CTA’s status or regarding any guidance that FinCEN may provide.
Angela Gamalski Brandy Bruyere